15 660 Strategic Human Resource Management MIT Sloan School of Management Our Goal for SHRM To understand the strategic issues in using Human Resources for sustainable competitive advantage and how to implement the changes necessary to achieve this This requires that we be able to Think systematically and strategically about managing human assets Understand what really needs to be done to implement these policies HR Creating Value Human Resource Management Practices Employees Morale Commitment Productivity Competence Customers Satisfaction Loyalty Commitment Investors How does HR affect profitability cost growth cash flow and margin Adapted from David Ulrich Human Resource Champions p 247 The War for Talent In the new economy competition is global capital is abundant ideas are developed quickly and cheaply and people are willing to change jobs often In that kind of environment all that matters is talent superior talent will be tomorrow s prime source of competitive advantage Chambers E et al 1998 The War for Talent McKinsey Quarterly 2 15 Case Studies Southwest Airlines Portman Hotel Morgan Stanley Slade Company NUMMI Saturn ServiceMaster John Snow Institute Eastern Airlines Safelight Autoglass Visionary Design Systems SAS Institute Harrah s Entertainment Springfield ReManufacturing Nordstrom Two Mysteries How have these companies achieved extraordinary performance with people who are no different from those employed by the competition If what they are doing is so understandable why haven t their competitors simply replicated them and achieved similar competitive advantages Several Integrative Themes The role of HR in the execution of strategy The importance of alignment and consistency of HR with business strategy The range of HR levers available to managers Organizational Alignment Strategy Vision Executive Leadership What business are we in How will we compete What s our vision Model Behavior Symbolic action Key Success Factors What specific tasks have to get done to implement the strategy Human Resources Culture Do people have the necessary competencies Are they motivated What are the norms values attitudes and behaviors needed Formal Organization Structure Rewards Controls Careers Strategic HR Consistency Business Unit Strategy Vision Objectives Products Services Customers Markets Technology Timing Key Success Factors 1 Human Resource Levers Vision Purpose Recruitment Selection Training Development Reward and Recognition Careers Promotions Job Design Teamwork Measurement Information Sharing Culture 0 2 3 4 5 Degree of Alignment 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Looking Back on the course Exposure to some intriguing HR practices Vision values and key success factors Open Book Management critical s Team based systems social control Selection for fit as well as skills Investing in people intellectual capital Long term employment vs free agency Psychological vs financial ownership Performance management HR s Role The job of Human Resources is NOT primarily to Keep the company out of court Enforce rules and maintain consistency Manage administrative processes Tell people No HR s job is to Help build and reinforce the company s values and culture Play a leadership role in building capabilities that ensure the successful execution of business strategy The most effective way to forge a wining team is to call on the player s needs to connect with something larger than themselves Phil Jackson Former coach of the Chicago Bull now coach of the L A Lakers References and Resources James N Baron and David M Kreps 2000 Strategic Human Resources Frameworks for General Managers New York John Wiley Sons Roger Brown 1986 Social Psychology The Second Edition New York Free Press Charles O Reilly and Jeffrey Pfeffer 2000 Hidden Value How Great Companies Achieve Extraordinary Results With Ordinary People Boston MA Harvard Business School Press Jeffrey Pfeffer 1988 The Human Equation Building Profits by Putting People First Boston MA Harvard Business School Press David Nadler and Michael Tushman 1998 Competing by Design The Power of Organizational Architectures New York Oxford University Press Michael Tushman and Charles O Reilly 1997 Winning through Innovation A Practical Guide to Leading Organizational Change and Renewal Boston MA Harvard Business School Press